Poor HR’s key role in oil reserves scandal

Poor HR decisions were a key factor leading to Shell’s admission in 2004 that it had overstated its oil reserves, one of the oil giant’s HR executives has admitted.

Bas van Eekeren, HR strategy and employee relations executive at Shell International, said that the oil reserves scandal had led to a “talent crisis” for the company, which now has to rebuild its reputation with internal staff.

“The company has lost the plot a bit recently,” he told delegates at a talent management conference in Barcelona organised by events company Marcus Evans. “The tools are still great, but the execution of it is not really happening in Shell at the moment.”

When the company admitted that it had overstated its oil reserve base by one-fifth last year, shareholders demanded an internal analysis. This revealed that the company had failed to invest in the technical skills needed to keep pace with its rivals BP and Exxon Mobil, which in turn meant that Shell held less oil in reserve than its competitors.

Van Eekeren said Shell had short-sightedly laid off technical staff a decade ago during a highly profitable period and now had a shortage in its talent pipeline.

The company’s ‘open resourcing’ approach – making succession decisions transparent and encouraging employees to apply for the jobs – had not benefited succession planning, he said.

“We lost the art of personnel planning,” said van Eekeren. “This [open resourcing] gives full flexibility to the individual and transparency. What it doesn’t do very well is look after the interests of the company.”

Shell is now looking at re-introducing the concept of the ‘job for life’ for some technical skills and recently created the role of chief scientist to allow technical specialists to have a joint technical and managerial career.

“One of our problems is to manage our credibility internally as well as externally. HR has a leading role in that,” van Eekeren said.